She suggests the Post Office take on public banking with federally subsidized interest rates, much the payday loans Washington way Washington already subsidizes or guarantees loans for two things primarily geared toward the middle class: houses and college.
Abstract: “Ten states and the District of Columbia prohibit payday loan stores, and 31 other states have imposed regulatory restraints on their operations, ranging from limits on fees and loan amounts to the number of rollovers and renewals allowed a borrower. Given the importance of payday lenders to significant segments of the population and the wide variation among state regulatory regimes, our paper examines the extent to which the concentration of payday lenders in counties throughout the country is related to the regulatory environment as well as to various financial and demographic factors. The analysis is based on a unique dataset that has been obtained directly from each state’s appropriate regulatory authority.”
Abstract: “Economic theory suggests that payday lending can either increase or decrease consumer welfare. Consumers can use payday loans to cushion the effects of financial shocks, but payday loans may also increase the chance that consumers will succumb to temptation or cognitive errors and seek instant gratification. Both supporters and critics of payday lending have alleged that the welfare effects of the industry can be substantial and that the legalization of payday lending can even have measurable effects on proxies for financial distress, such as bankruptcy, foreclosure, and property crime. Continue reading Some useful studies: “Do State Regulations Affect Payday Lender Concentration?